IFPI Press Release, June 14, 2000
Record Industry Responds with Over 100 Internet Investigations
and a New Internet Piracy Unit
London – June 14, 2000
Sales of pirate music CDs worldwide now top more than 500 million units annually, with at least 25 million pirate files available for trading on the Internet, according to a new review of the global illegal music market released by IFPI today.
IFPI’s latest report on the global music pirate market was released at a press conference in London today, where international recording industry heads called on governments to modernize their laws and enforcement practices to match the industry’s expanded anti-piracy efforts worldwide.
They also vowed that with a dual strategy of deterrence and new investment, the music industry will win the fight against Internet piracy. That strategy combines aggressive measures against Internet pirates with the development of a range of new ventures to give consumers all the benefits of a legitimate online music business.
According to IFPI’s Music Piracy Report 2000, physical recordings still account for the vast bulk of the world music pirate market, comprising an estimated 1.9 billion discs and cassettes with a total 1999 value of USS4.1 billion. However, piracy online has become a significant new threat, as have other new forms including CD-R piracy.
Country-by-country, there is mixed news. IFPI’s estimates show that legal music unit sales are outnumbered by illegal ones in no fewer than 19 countries. Eastern Europe and Latin America are the regions that show the highest domestic piracy rates; South East Asia is the region with the highest production capacity feeding the world pirate markets.
Piracy of CD-Rs – recordable discs produced in mass quantifies on stacked portable replicating machinery – has spread alarmingly in the last year. IFPI’s first-ever estimate on CDR piracy is that at least 60 million pirate CDR discs were sold worldwide in 1999.
Excluding CDR piracy (for which there was no estimate for 1998), a year-on-year comparison shows sales of manufactured pressed pirate CDs grew by 13% from 400 million units in 1998 to 450 million in I999. Adding the estimate for CDR pirate sales takes the total estimate for pirate music disc sales to more than 500 million units. That means that one in five CDs sold worldwide is a pirate copy.
There was a decline in sales of pirate music cassettes to 1.4 billion units, compared to 1.6 billion the previous year. Indications are that CD-R piracy, where production and distribution are largely local, is beginning to take over the role played by local pirate cassette replicators.
Underpinning the proliferation of illegal CD traffic was a large increase in the global manufacturing capacity of optical discs. Legitimate demand for optical discs (including non-audio formats) is less than half the current worldwide capacity, which has grown by 340% over the last five years to 23 billion units. The result is a huge surplus of available capacity, and this is clearly driving pirate disc production.
IFPI’s recently-created global enforcement team has expanded its operations substantially in the last year. There are presently more than 100 cases under investigation involving organized crime, as well as 20 pending lawsuits. There were record damages settlements, totaling more than US$20 million, against infringers in both the USA and Europe. A total of 34 million CDs imports from South East Asia to Latin America has been seized in the last two years. In addition, in a new development, several underground plants were put out of action in the past year.
IFPI Chairman mad CEO Jay Berman said: “The spread of copyright piracy is the single biggest challenge facing all creative industries today. The problem is diversifying fast, ranging from the organized crime syndicate mass-trafficking CDs, to the Internet pirate site offering stolen music to millions for free. In all its forms piracy is robbing artists and producers of the right to earn a living from their creative product. And in all its forms, piracy can be held in check, as long as there is the political will, the laws and the enforcement machinery to fight it.”
Jorgen Larsen, Chairman and CEO of Universal Music International, said: “Record companies are looking forward to a great future in the online music market. That future will be shaped by the creators, those who invest billions of dollars to develop great music. It must not be allowed to be shaped by those who steal the works of artists and record companies and invest nothing in return”.
Jay Samit, Senior Vice President, EMI Recorded Music, said: “The record industry is working hard to develop systems to ensure that artists’ work is protected and to bring music to the widest possible market.”
Highlights of IFPI’s Piracy Report
There is growing evidence of the link between CD piracy and organized crime. Examples include the arrests in London of a Russian crime ring charged with being involved in large-scale credit card fraud as well as in the traffic of pirate CDs.
A new trend of wholly “underground” pirate CD plants emerged for the first time in 1999. Illicit plants have been discovered in Latin America, Asia and Europe. Plants were raided in Paraguay, Holland and the Philippines.
IFPI’s Main Board granted new resources to the global enforcement team, whose headcount will have doubled to 50 by the end of this year. Total optical disc seizures were 60 million units in 1999, on a par with 1998.
Encouraging moves by governments included strong new laws in Hong Kong and Mexico, and good progress by the European Commission towards a creating pan-EU anti-piracy strategy through the EC Green Paper on Piracy and Counterfeiting. Ukraine, Europe’s most problematic pirate producer, very recently agreed to take firm anti-piracy measures; Italy, with a 25% piracy rate, failed to deliver a long-promised anti-piracy law; and in Israel and China there was little improvement in 1999.
Internet piracy – according to the most conservative estimate, there are at least 25 million infringing files available on file-trading services such as Napster alone. The rate of downloading all music from the Internet, according to Forrester Research, is estimated at 1 billion downloads annually. Last year some 15,000 sites hosting over 3 million files were removed from the Internet due to action by IFPI and its national associations.
For further information contact:
Adrian Strain, Director of Communications, IFPI: (44) 207 878 7900